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representatives in that they can sell offerings from multiple manufacturers. Some distributors are
exclusive, meaning they sell the products of only one manufacturer.
Advantages and Disadvantages of Outsourcing
Outsourcing some of its sales efforts can provide a producer with several advantages. We’ve already
mentioned a few, such as gaining access to more buyers because the organizations and people to which
the company has outsourced the work sells a broader array of products. Having a broad array to choose
from is more desirable from a buyer’s perspective. Moreover, outsourced salespeople have existing
relationships with the buyers that can be leveraged. Thus, entering new markets, such as new product
markets or new countries, via distributors, independent agents, or manufacturer’s representatives can
increase the speed at which the company’s offerings penetrate a market. These people and organizations
also possess key market information and understand competitors and their strategies—information
marketers can leverage.
In terms of a company’s costs, outsourcing can be less expensive. The company that outsources the work
doesn’t bear the responsibility and expense of training the salespeople, except to inform them about the
company’s products. In addition, because the salespeople often work on a straight commission basis, the
company only pays them when they sell its products.
The disadvantages of outsourcing can be boiled down to one word: control. Distributors, manufacturer’s
representatives, and agents are independent. They can decide what to sell and when to sell it. Unlike an
employee who can be required to offer your product, they can choose to offer a customer a competing
product or simply a different product than the one you sell. Nor can you force them to make sales calls. If
it is a beautiful day and the golf course beckons, you may find your rep somewhere on the links.
To deal with control issues, companies often create incentive programs to motivate independent agents
and manufacturer’s representatives. Attractive commissions are more likely to get your product
mentioned on every call. So are spiffs. Spiffs (a term that began as an acronym for special promotion
incentive funds) are short-term bonus payments companies use to encourage salespeople to sell certain
products. Also keep in mind that salespeople want to pitch products that are easy to sell and have short